A Canadian pilot of radio-frequency identification technology at Loblaws saw improved inventory management and use of promotions, according to a white paper about the project released Thursday.
The Canadian Council of Grocery Distributors and Food & Consumer Products of Canada announced the results of the RFID test-drive, which took place between May of last year and January. Suppliers who participated included Maple Leaf Foods, General Mills Canada Corp., Kruger Products Limited and Unilever Canada Inc. IBM lead the product implementation with technologies from Intermec and Motorola. The project involved the “slap and ship” method of applying RFID tags to products that are managed in logistics and warehouse operations.
RFID has been touted as a major way to improve operational efficiencies by using the tags to better track where products are in the supply chain. A big issue is how well the tags are “read” and monitored by the IT systems that support supply chain operations. The IBM white paper about the Loblaws project said read rates increased from 71 to 89 per cent over the course of the pilot, in part because everyone involved got better at placing the tags on products.
Loblaws did not respond to interview requests, and David Wilkes, senior vice-president of the Canadian Council of Grocery Distributors, would not comment on whether the grocer would continue to use RFID. He said the aim of the project was to create a template on how to introduce RFID into supply chains that retailers and suppliers could use.
“There is a lot of learning in the report that is going to prepare IT managers within the grocery chain,” he said. “We want them to take the time now to prepare before the market moves.”
Enterprises in the grocery sector should start assessing, for example, whether they have certain trading partners who routinely run out of stock, or whether their promotions can be managed more effectively. The report also looks at the costs involved in such projects, 81 per cent of which Wilkes said could be attributed to the tags and the labour involved in deploying them. “It never goes away,” he said.
However Elaine Smith, senior vice-president of Food & Consumer Products of Canada, said IT departments would be better to examine the way RFID might affect their overall computing environment.
“You can assume the costs of the tags and the readers will come down – I think that’s fairly safe to say,” she said. “The biggest cost is the systems integration piece. That’s something you can start thinking about now.”
Smith also said RFID early adopters should also ensure they have data integrity – accurate information that can be properly synchronized with other systems.
The IBM white paper said RFID-based supply chains performed better the earlier the tags were introduced into the process. It also helped identify incorrect “picks” in a warehouse earlier on and if shipments were short.
The white paper comes out not long after a report from PricewaterhouseCoopers that suggested RFID uptake will not reach the early hype due to some of the difficulties associated with the technology. Smith agreed with that premise.
“It’s a learning curve that we’re on, and it will take some time,” she said. “RFID will be here at some point in the future and there’s lots of reasons to do it. It’s not a lot different than the UPC codes we had years ago.”